Submissions on the federal government’s proposed reforms to Australia’s merger notification thresholds are open until 20 September 2024.
The Albanese government is consulting on notification thresholds as part of reforms to merger rules aimed at boosting competition and productivity in Australia’s economy.
They are designed to ensure the Australian Competition and Consumer Commission (ACCC) is informed of mergers most likely to be anti‑competitive, while minimising the overall compliance burden on businesses.
Mergers that meet the thresholds will be subject to the new rules from 1 January 2026, following passage of legislation.
The government has now released a consultation paper on the proposed thresholds. There will be periodic reviews of the new merger system, including a statutory review which will take place three years from the start of the new system.
While most mergers are unlikely to raise competition concerns, the government notes that Australia’s merger control system plays a crucial gatekeeper role in focusing on the small number of deals “that could substantially lessen competition, harming consumers and the wider economy”.
“Discouraging such mergers, and stopping those that try to proceed, is crucial for maintaining downward pressure on the cost of living. The government asked the Competition Review to assess whether Australia’s merger control system is fit for purpose,” government ministers said in a 30 August joint statement.
“The proposed thresholds will apply economy‑wide and align with international best practice. They’re targeted and risk based and aim to not capture acquisitions by small businesses.”
Thresholds relate to the monetary value of the proposed transaction and the concentration of the affected market.
Monetary thresholds
It is proposed that mergers will trigger mandatory notification requirements if they reach either of two following monetary thresholds and there is a material connection to Australia.
Firstly, if the combined Australian turnover of the merger parties (including the acquirer group) is at least $200 million, and either the Australian turnover is at least $40 million for each of at least two of the merger parties or if the global transaction value is at least $200 million.
The second is if the acquirer group’s Australian turnover is at least $500 million, and either the Australian turnover is at least $10 million for each of at least two of the merger parties or if the global transaction value is at least $50 million.
Market concentration thresholds
Additionally, it has proposed a mandatory notification that will be triggered if a deal reaches either of two market concentration thresholds.
The first being a share of 25% of an affected market, where Australian turnover of at least two of the parties to the acquisition (including the acquirer group) is at least $20 million.
The second is a share of 50% of an affected market, with a lower turnover requirement of $10 million.
The government says these reforms will make it easier for the majority of mergers to be approved quickly, so the ACCC can focus on the minority that give rise to competition concerns.
In the Merger Reform: A Faster, Stronger and Simpler System for a More Competitive Economy paper released in April, the government noted that “a single, streamlined merger control system will enhance efficiency, predictability and transparency for businesses, stakeholders and the community, and removes the scope for strategic behaviour by merger parties”.
“It will ensure the ACCC is significantly better equipped to detect, review and act against those mergers that substantially lessen competition,” the paper said.
Write to Adam Orlando at Mining.com.au
Images: Unsplash & Australian Government
